ET Intelligence Group: Has ITC killed two birds with the same stone? The tobacco-to-hotels major has changed the identity of its lifestyle apparel brand from Wills Lifestyle to WLS. It will now sell apparel that is 100 per cent natural – from fabric to threads, buttons and labels. The new brand logo is befittingly named Tattva.
By renaming its premium apparel retail brand to WLS, it has effectively removed the brand’s connection with the Wills cigarette brand and made the brand name trendier, in line with other brands like W, AND, AJIO, M&S and D&G.
Simultaneously, by making it allnatural, it has introduced a sharp differentiator in the apparel market – riding on the current bandwagon of preference for natural and organic products. It has become the first mainstream Indian apparel brand to go natural.
However, it remains to be seen how much impact re-branding will have on the prospects of ITC’s lifestyle retailing business. The segment has been under pressure in recent years – effectively pulling down the growth rates of the company’s FMCG business. According to ITC’s latest annual report, 2017-18 was another challenging year for the branded apparel industry. Transition to GST regime triggered a premature end to the Spring Summer 2017 season with most players announcing an early end-of-season sale period, which was extended in a bid to liquidate pre-GST merchandise.
On the other hand, ecommerce players continued with their aggressive push to capture market share amongst value seeking consumers by offering heavy discounts and launching exclusive labels and brands. The company’s annual report for 2016-17 mentions that the branded apparel industry witnessed severe pressure during the year in the wake of consumers cutting back on discretionary spends, heavy discounting by industry players and emergence of value retailing by ecommerce majors.
Re-branding alone may not help unless combined with change in sales strategy and execution. According to Abneesh Roy of Edelweiss Securities, although this re-branding will help, still ITC needs to take more steps to get back strong growth in this business. The tectonic shift comes at a time when consumers are increasingly becoming conscious of their impact on environment. The ITC stock closed 0.6 per cent higher on Monday.
Source: Economic Times